The American Farm Bureau Federation and Georgetown University have launched a challenge program to support entrepreneurship throughout the rural United States. They will award a $30,000 prize to the winner.
Do you have a creative business or business idea? Check out the details for this challenge and imagine what $30,000 would do to get your idea launched.
Rural Entrepreneurship Challenge
A farm is worth money and a farm business could be worth money too. Can you imagine selling your customer list to an eager young farmer and putting $20,000 the bank? Most farm owners have put in hours upon hours to oversee the business. We often call these efforts the “sweat equity” that an owner contributes to the business. Here is the catch…the farm owner must sell something in order to recoup any of that sweat equity. (skip to the Business Valuation for Sale methods guide by Rosalie Wilson)
Many farms are reliant on large amounts of land and equipment and it can take many years of paying down loans to build up equity in the business. The benefit of all those years of hard work and deferred owner draws (cash draw) is that the farm owner owns land that has appreciated (gone up) in value. Accurate appraisal of your land and other assets is an essential step in setting a price on your farm.
Farm business models have evolved in the past 30 years. Many viable and profitable farm businesses have more to sell than land and equipment. Owners can recoup the sweat equity of product development, establishing a customer base and creating an opportunity for a new owner through the process of business valuation and sale. This is an essential step for brand based products or farm businesses with innovative market strategies. Remember, sweat equity doesn’t mean anything unless you make a plan to get paid for it.
Follow this link to download the Business Valuation for Sale methods guide by Rosalie Wilson. It describes 5 key valuation methods: Capitalization rate, comparable analysis valuation, asset based valuation, land use valuation and the honest “real life” valuation.
On May 15th the Vermont Farm and Forest Viability Program organized a meeting of statewide farm business specialists for a training session on farm marketing plans. Participants included service provider organizations,independent consultants and a guest presentation by Myrna Greenfield (Good Egg Marketing). Here is a summary of the conversation when advisers were asked, “How much time should a business owner spend to develop a marketing plan?”
Adviser A: One successful business spent up to two years completing the market research and developing a plan before they began farming. They researched the population demographics and competition in various regions in order to select a location to farm and a strategy to sell their products.They grew a vegetable business to $250,000 in sales in five years.
Adviser B: It depends how much is at stake. Owners that can afford to lose all their investment might take their vision, launch the business and try to develop a plan on-the-fly. This happens more than we realize and most times the business will fail. If you can’t afford to take that risk you need to determine an overall break even level for the entire farm first. Before you start the business you need to complete the market research and confirm you can generate the needed sales to reach break even. A smart manager can then adapt a new plan once you have passed the break-even target.
Adviser C: That all sounds great but many farms are already in operation and they want to launch new enterprises. I advise them to try things out on a small scale. Run a test year to produce and sell the goods. You’ll need to set aside part of the “farming” day to initiate relationships and learn how to sell the product. Identify how much risk you are willing to take and test out the idea at a scale where you can sustain the losses if it fails but also get enough information to understand if it is feasible to continue.
Adviser D: A farm owner needs to calculate cost of production on the farm in order to set accurate prices and production targets. That information is needed to identify the most appropriate buyers (either direct or wholesale) for your products. Cost-based pricing is essential to developing a feasible marketing plan.
This was posted as an April Fools joke on April 1, 2014.
We are not aware of any activity that resembles the post written below but we had quite a bit of fun exploring the possibilities. Enjoy.
Here in Vermont we have a small number pig milk start-ups that are combining new research and some good-old creativity to find a niche.Farm business adviser Sam Smith at the Intervale Center says, “I see pig milk and the related products as the next big opportunity for our producers here in Vermont. We have a couple of farmers who have been experimenting and their success has led me to think this is going to be a very lucrative market. If you look at it purely from the perspective of the number of teats per animal, you have three times the amount of teats than a cow, which means three times the profitability!”
What are the reasons for pigs milk? First is the potential to ramp up production quickly. Pig breeding cycles are relatively short making it easy for a farmer to build a herd of milking pigs quickly. Smith says “This is another game changer when compared to cow or goat dairies. You can have a pig dairy online in under six months with a lower capital investment, a great option for beginning farmers. And when you need replacement pigs you have plenty to choose from.”
Pigs, like humans, are a mono gastric species that digests food with one stomach. With a diet closer to humans than cows, pigs milk is also more similar to human breast milk. This amounts to a more digestible and less allergy prone-product. Artisan cheese makers have also been experimenting with the milk as a potential way to further diversify their offerings. Alison Lancet, who operates the farmstead cheese operation magnolia dairy said “We have produced some wonderful blooming rind cheeses with pig’s milk, and plan to have them for sale within the next three months.” Pigs milk is high in fat and is considered ideal for new products like restorative health products. These are part food and part medicine to assist in treating nutritional problems and skin conditions.
Locavore groups nationally have noted that many regulations placed on direct on-farm milk sales are specific to cow or goats milk. Pigs milk is seen as a way to promote community access to farm based products without conflicting with current regulations.
Industry leaders have quietly been evaluating other products too. Many people don’t know that the once iconic 100% pig-skin football has been replaced with mix of natural and synthetic materials to improve it’s grip. Recent pig breeding programs focused on improvements to meat yields had the trade-off of leaner animals which impacted the texture of pig skin. Since 2002 a partnership between American football companies and several in Australian have been evaluating pig skin trials from heritage pig breeds. These are the same breeds being evaluated for dairy production! What a great fit for high school sports programs re-evaluating ways to integrate sustainability into student learning!
A new round of grants for dairy farmers that are members of the St. Albans Cooperative was announced on March 14th. Funds donated by Commonwealth Dairy to the VT Housing and Conservation Board will support the grants program. Grant proposals up to $40,000 each will be accepted. Farm applicants will be required to submit a business plan with their application for the grant and UVM Extension Farm Viability will be available to provide pre-review of business plans before they are submitted with applications.
Any farms that would like to get their business plan reviewed before application must contact Liz Gleason at the Vermont Farm and Forest Viability Program, 802-828-3370 or email at firstname.lastname@example.org. Go to this link for all the information you need about the grants program. http://www.vhcb.org/Farm-Forest-Viability/dairy-grants/
The grant application deadline is April 28th. Farms must remember that pre-review requires the submission of plans in advance of April 28th to allow ample time for review and revisions. Follow the link above for more details.
Vermont Health Connect has been providing information sessions about important changes to health care enrollment for farmers. Most recently they have developed this guide:VT Health Connect Ag Producer Resource Packet 3.3.14.
This is a critical time for businesses and individuals. There is a March 15th sign up deadline for individuals seeking coverage to begin April 1st. Many group association plans that farmers have traditionally enrolled through will expire on March 31st.
Click the link above to open the most recent VT Health Connect guide and find details, frequently asked questions and important contacts.
UVM Extension Crop Insurance specialist Pam Smith has just posted a sheet with key crop insurance dates for 2014. Click this link below to see details on a variety of crop and revenue insurance programs and the sign up deadlines for each:
2014 Key Crop Insurance Dates
Mark your calendar for VT Farm Show on January 28-30. Be sure to find the UVM Extension Farm Viability table in the trade show. Come speak with one of our farm business specialists and learn how our program can advance your business goals.
Here is a question that we received this week, “….I am a farm owner and I have employees that live in housing on the farm. What are my rights or responsibilities if I decide to terminate the employee or terminate the housing agreement? Since the housing is linked to employment is this different than a standard renter/landlord situation?”
There are a variety of things to consider when setting up a housing agreement with a farm employee. There are also a number of laws that needs to be considered. In 2010 the VT Legislature passed Act 89 “An Act Relating to the Termination of Occupancy of Farm Employee Housing”. Click Here to read Act 89: ACT089_VT Statute
UVM Extension Farming Across Cultures Program has also posted this resource sheet that describes the specific steps a farm owner/landlord can take if employment or housing arrangements are to be terminated. Click this link to their: http://www.uvm.edu/extension/agriculture/faccp/files/aglabor_housing/farm_housing_statute.pdf
Farm owners can also contact the VT Department of Housing and Community Development to find resources for landlords. Click here for their website: http://accd.vermont.gov/strong_communities/housing/housing_resources/rental
Despite the lack of clarity and challenges of the new national Affordable Care Act, farm employers must prepare to set up the appropriate health care options for their employees (or make the accurate determination that no plans will be offered).
Farm Credit East just posted a detailed webinar: (click below to link to webinar)
The Affordable Care Act:What Farmers Need to Know
Farm owners and farm business advisers should review this material and plan to keep up with current news to determine if and how they need to provide coverage for employees. * It is important to research the specific policies in each state. For example, the State of Vermont law only provides an exemption for 4 or less employees. That is very different than the federal exemption of 50 or less employees. Farms in VT whose employee base meets the criteria of 5 or more full time employees may be required to provide health care or to pay a penalty if care is not provided.
Vermont farm owners can research their particular situation at VT Health Connect: Small Business Resources